Skift Take
All eyes will be on Sedona, Arizona. If it can fund itself and promote tourism without the city's dollars, other destinations could potentially follow its example.
The Sedona Chamber of Commerce & Tourism Bureau recently ended its tourism partnership with the City of Sedona because the local government wouldn’t allow it to restart destination marketing. The move came in the wake of a November election that saw a mayor and council member voted out and that was seen as a referendum on resident attitudes toward tourism.
“It got to the point where somebody had to make a bold decision,” said city councilman Peter Furman. “The chamber pulled the trigger first.”
The non-renewal of the contract for the next fiscal year represents a broader tale of many places rethinking their spending on tourism promotion. Sedona’s tourism bureau is one of a growing list of entities put under greater pressure from legislators and constituents to redirect funds toward destination management and other community goals. A recent Skift megatrend noted that residents in many parts of the world no longer want to be spectators in tourism.
Tourism Surge, Tourism Slump
Two years ago, the Sedona City Council revised its contract with the tourism bureau, stopping the bureau from spending money on destination marketing.
Before the pause, the tourism bureau spent between $500,000 and $600,000 a year on marketing and advertising per year to attract affluent, longer-staying visitors, said Michelle Conway, CEO and president of Sedona Chamber of Commerce & Tourism Bureau. The promotion expenses were only a minority of its expenditure, with destination management the bulk. Yet for the past two years, it only spent money on destination management.
Not everyone’s happy about the move.
Sedona benefited from a surge in tourism in 2021. But last year, business flagged.
Like other rural destinations, Sedona — a hiking and mountain biking destination — is facing wider competition now that the pandemic is over, international travel is open, and cities are attractive again to tourists.
In 2022, Sedona saw a decline in tourist traffic year over year. Meanwhile, direct competitors like Jackson Hole and Napa Valley haven’t seen the same drop and are eating away at Sedona’s share, Conway said.
Many hoteliers are concerned. Occupancy is now down 6.5 percent from its pre-pandemic level. Average daily rates have been dropping.
Hoteliers had been one of the most active stakeholders years ago in pushing for a 0.5 percent addition to the city’s 3 percent bed tax. The 0.5 percent was originally earmarked specifically for tourism promotion.
Businesses — 60 percent of which are tourism-oriented — are now “suffering” and “asking for help,” Conway said. Some have seen double-digit drops in revenue. On top of lost visitor spending, business operations costs are above pre-Covid levels.
The tourism bureau thought it was time to restart destination marketing. Yet the Sedona City Council wouldn’t budge. It denied requests to jump-start marketing.
To properly support its business stakeholders, the chamber had to break away from the city, its leaders said. It’s confident it will find alternative sources to support future marketing efforts.
2021: The Turning Point
Something of a split between residents and the tourism industry had been appearing before the marketing pause.
Many locals haven’t been happy with changes in their life due to tourism in the last five years, said Ryan Casago, a resident and local vacation rental owner.
The year 2021 was something of a turning point because of overtourism, said Conway. Like other outdoor destinations during the pandemic, Sedona saw an explosion in visitors, with 3.7 million in 2021, up from its annual 3 million, according to the Sedona Chamber of Commerce.
“We were super successful,” said Furman. “Tourists started to flock to Sedona.”
But there were negative consequences.
The city’s road infrastructure was being pushed “close to its limits,” said Furman.
Traffic congestion, longer wait times at restaurants, and poor habits from new outdoor enthusiasts hit the town of 10,000 people.
The influx of short-term rental properties has cut available housing and changed the community makeup. Conway said there are now more short-term rental rooms than hotel rooms (2,800), which has added to the angst of the locals.
Affordable and available housing has become harder to come by for large segments of the local workforce, said Furman.
Such stress on community, physical, and natural infrastructure was a common problem among destinations in 2021 and 2022 in response to unprecedented tourism. What commonly followed were communities questioning the value of tourism promotion. In Jackson Hole, Wyoming, for example, residents have directly questioned its tourism board about ceasing marketing.
Destination marketing tactics like filling in slow seasons and promoting lesser-used trails instead of popular attractions do more harm than good, said Furman. Lesser known trails not set up for parking suffered overcapacity, for example, which pushed the tourist parking to other locations.
“All those decisions have unintended consequences of pissing off the locals,” he said.
Tough Choices
The chamber doesn’t have an alternative funding source yet. The details of which funding model to use to replace the loss of bed tax dollars are still being worked out, but the business community said it’s fully behind whatever the chamber does.
Come July 1, when the current contract ends, the chamber will have to do “what it needs to survive,” said Conway. That may include operational and program cuts. Details on who will be responsible for which destination management programs and projects are still being worked out, but the chamber expects to have less on its plate.
With the contract over, Conway is “excited” about the new opportunities for creative marketing now that it won’t have its hands tied. One area of interest is potentially expanding marketing to include the greater Verde Valley that Sedona sits in — highlighting the region’s diversity of towns, wine country, and art communities.
Meanwhile, the city council is looking at hiring a consultant to help internally manage and mitigate the impacts of tourism.
“I don’t see a lot of energy in the near term to do destination marketing,” said Furman.
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Tags: arizona, destination management, destination marketing, destination marketing organizations, funding, outdoor tourism, rural tourism, sedona, sustainable tourism, tourism boards, tourism marketing, us travel
Photo credit: Sedona's tourism agency fired its city council and went its own way to pursue destination marketing. Source: Unsplash.